Egypt’s petroleum minister, Sameh Fahmi, has described as "groundless" reports suggesting that Egypt had signed a $3 billion deal to supply Israel with natural gas. But a spokesperson for the Egyptian company planning to supply the gas said that deal is being negotiated.

Speaking to Al-Ahram, Fahmi emphasized that no deal has been concluded to supply natural gas to Israel, and described the news reports which had implied such a deal as existing as “very strange."

Fahmi evidently was alluding to reports emanating from Israel.

In late January, after months of deliberations, the board of directors of Israel’s state-owned power provider, the Israel Electric Corporation, ruled that the company would not buy its natural gas supply exclusively from an Israeli supplier, but instead it would purchase 55 percent of the supply from the EMG corporation, which would pipe the gas in from Egypt.

Reacting to the Egyptian minister’s statement, a spokesperson for EMG said that the negotiations for the supply of natural gas from Egypt to Israel is not taking place at the governmental level, but rather between EMG and the Israel Electric Corporation.

EMG, which is a private company, received a franchise from the Egyptian government to export natural gas. This franchise forms the basis for the negotiations it is conducting with the Israel Electric Corporation and Turkish interests, the spokesperson added.

Talks between EMG and the Israel Electric Corporation are scheduled to resume in the Israeli port city of Haifa on Tuesday, February 20.

“The aim of the talks is to conclude a signed agreement at the earliest possible time,” the EMG spokesperson stated, “and to ensure that the flow of natural gas from Egypt to the power station of the Israel Electric Corporation commences 18 months from the date on which the agreement is activated.”

During the months leading up to the decision by the board of the Israel Electric Corporation, Israeli natural gas producers waged a costly campaign in the printed and electronic mass media to sway public opinion against a decision to buy gas from a foreign supplier.

Rejecting arguments by economists, who said that increasing the level of competition in the natural gas market would result in cheaper electricity for consumers, the gas producers warned about establishing a reliance on a foreign supplier who may regulate the flow of gas according to the state of political relationship between the two countries.

Ultimately, the Israel Electric Corporation’s board was not swayed by the argument made by the Israeli gas producers. However, politics have long played a role in the Egypt and Israel’s negotiations over gas supply.

These talks began in the mid-1990s, which Yitzhak Rabin was Israel’s prime minister, and relations with Egypt warmed following the signing of the Oslo accords.

But the negotiations stalled when the right-wing government of Benjamin Netanyahu swept into power. Israel’s newly elected prime minister, Ariel Sharon, served as infrastructure minister under Netanyahu, and as such was the minister in charge of the country’s natural gas program.

Fahmi’s recent statement may have been but an attempt to distance the Egyptian government from EMG’s pending agreement with the Israel Electric Corporation. But it also may be function as signal to the new Israeli prime minister that Egypt may be ready to use its economic clout to pressure Israel in the political arena.

Last week, Egypt signed contracts to supply gas to Syria, Lebanon, and Jordan. – (Albawaba-MEBG)